Socially Responsible Investing: Cost or Not?

In recent years the power of corporate reputation has become a major issue both at a scientific level and in professional practice. The positive image of a company in any industry supports sales of existing products and services, respectively, while contributing to the successful introduction of new products and services. It is notable that most corporate reputation is part of the corporate balance sheet as a capitalized size and valued as such in the case of acquisitions, strategic alliances or joint ventures.

A large number of companies recognize the business benefits of CSR as a policy and practice. Simultaneously, a new practice that is constantly gaining ground in global investment is what is called “Socially Responsible Investing”. These investments are particularly popular, not only to large investors but also to small businesses, insurance companies and even to individual investors, while rated them as one of the most effective tools to serve the social and environmental objectives of corporate social responsibility. Furthermore, as a typical win-win opportunity they combine economic return by minimizing risks in economic, social and environmental terms.

However a question arises: Do socially responsible investments imply costs for investors in the form of lower performance, such as organic food is more expensive than conventional? Although this is theoretically possible, as the Citigroup Smith Barney observes, since it reduces investors’ options, the empirical data give contradictory answers which ultimately did not exclude the possibility of even higher yields.

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